The U.S. Surface Transportation Board, in a decision reached on May 13 and issued on May 15, denied a petition from Arkansas Electric Cooperative to reconsider its decision that the “safe harbor” provision of a BNSF Railway tariff, which requires coal shippers to take certain actions intended to reduce the amount of coal dust lost from railcars during transit from mines in the Powder River Basin, is not unreasonable.
The board instituted a prior declaratory order proceeding in December 2009 to consider whether provisions of a BNSF tariff requiring shippers to limit the emission of coal dust from railcars was an unreasonable practice. In March 2011, the board issued a decision in that proceeding finding that coal dust is a particularly harmful ballast foulant and that BNSF may require coal shippers to take reasonable steps to suppress coal dust emissions from open-top railcars. Notwithstanding that determination, the board also found that the tariff, when considered as a whole, was not reasonable and therefore violated federal code.
The term “ballast,” incidentally, basically means that coal dust can settle on the railroad tracks and lead to track instability and potential derailments.
In particular, the board found it problematic that, under the tariff as drafted, shippers would not know whether their railcars were in compliance with BNSF’s loading requirements even if they employed commercially accepted methods of coal dust suppression. The board observed that a cost-effective safe harbor provision (i.e., specific coal dust suppression measures that would constitute compliance with the tariff) would significantly alleviate its concerns.
Subsequently, BNSF issued a revision to its tariff which made several changes to the requirements regarding the control of coal dust emissions from trains loaded at mines in the PRB, which produce a particularly dust coal. The most important changes were that: BNSF changed the measurement standard from a proprietary methodology that the board questioned to a requirement that shippers take measures to reduce in-transit losses of coal dust from loaded coal cars by at least 85%; and BNSF added a “safe harbor” provision under which shippers that met the safe harbor requirements would be in compliance with the tariff regardless of actual coal dust release. To come within the safe harbor, a shipper must: load the cars as set forth in the tariff’s profiling requirement, and apply one of BNSF’s five approved suppression methods, consisting of application of certain “topper agents,” to the loaded cars.
In a later case brought by the Western Coal Traffic League (called the Coal Dust II decision), the board found that the safe harbor provision of the new tariff was not unreasonable, except for the liability provision. That is the decision that Arkansas Electric Cooperative (AECC) had been appealing.
AECC argued that the board did not sufficiently address arguments regarding the need for a cost-benefit analysis, railroad responsibility for coal dust loss, availability of lower-cost alternatives to the safe harbor, coal dust’s effect on track stability,the effectiveness of topper agents, and the tariff’s inconsistency with principles underlying the board’s rate relief procedures. “We find that AECC’s arguments do not provide any basis for reconsideration,” said the ruling issued May 15.
- First, the board said its decision that coal shippers should bear the cost of commercially reasonable methods of coal dust suppression does not turn on whether the affected rail carrier is revenue adequate or has some degree of pricing power. Rather, as the board held in Coal Dust I, rail carriers have the right to establish reasonable loading requirements for the safe transportation of the commodities they carry, including commercially reasonable requirements to keep the commodity intact and prevent spillage during transport. Because coal shippers and their mine agents control the loading of railcars at the mines, it is not unreasonable that these shippers should be responsible for the measures necessary to comply with the tariff, the board wrote.
- Second, while AECC briefly asserted in its reply evidence and argument in this proceeding that the board should require BNSF to pay or share the cost of safe harbor compliance, AECC did not provide a useful analytical framework nor the record evidence for the Board to reach that conclusion, the board found. AECC has not explained why BNSF’s market power, if it exists, negates the Board’s conclusion that it is not unreasonable to place that responsibility on shippers as part of the loading process, which is controlled by the shippers and the mine agents, it added.